STOCK MARKET WATCH, Friday, December 2, 2011

[Pale Blue Dot]

Source: du

STOCK MARKET WATCH, Friday, December 2, 2011

AT THE CLOSING BELL ON December 1, 2011

Dow 12,020.03 -25.65 (-0.21%)
Nasdaq 2,626.20 +5.86 (+0.22%)
S&P 500 1,244.58 -2.38 (-0.19%)
10-Yr Bond... 2.13 +0.04 (+2.01%)
30-Year Bond 3.14 +0.04 (+1.33%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren
Dishonorable Mention: former House majority leader, Tom DeLay

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 12

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[Pale Blue Dot]

1. Today's Reports

Dec 02 08:30 Nonfarm Payrolls Nov 75K 123K 80K
Dec 02 08:30 Nonfarm Private Payrolls Nov 110K 141K 104K
Dec 02 08:30 Unemployment Rate Nov 9.0% 9.0% 9.0%
Dec 02 08:30 Hourly Earnings Nov 0.2% 0.2% 0.2%
Dec 02 08:30 Average Workweek Nov 34.3 34.3 34.3

Read more: http://www.briefing.com/investor/calendars/economic/2011/11/28-02/#ixzz1fNU9X4Lo

[Demeter]

14. U.S. manufacturing lightly accelerates: ISM

http://www.marketwatch.com/story/us-manufacturing-lightly-accelerates-ism-2011-12-01

The U.S. manufacturing sector saw a modest acceleration in November as production and new orders picked up, according to a key gauge released Thursday. The Institute for Supply Management said its manufacturing index rose to 52.7% in November from 50.8% in October, which beat a MarketWatch-compiled economist forecast of 52.0%. Any reading above 50% indicates expansion, and the ISM gauge has been above that threshold for 28 straight months.

The new orders gauge rose 4.3 points to 56.7%, and the production gauge jumped 6.5 points to 56.6%. “Business is still holding its own,” said one purchasing manager in the chemical products industry. Another in electrical equipment said orders for the remaining two months have increased after an extended “summer dip.” “Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders,” said Bradley Holcomb, chair of the ISM, in a statement.

Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation, said the ISM data shows stronger growth than the broader economy, but he noted that sector has only recovered a bit over half of its loss from the recession. And there were worrying features as well: the employment gauge slowed 1.7 points to 51.8%, and supplier deliveries fell 1.4 points to 49.9%. The Labor Department is due to release its monthly employment report on Friday...Of the 18 industries measured, 9 reported contraction while 8 advanced.

Similar gauges from across the globe show the U.S. isn’t likely to get too much help from abroad. The two purchasing managers indexes measuring Chinese manufacturing both were below the 50% line. Australia, Austria, Brazil, the Czech Republic, France, Germany, Greece, Holland, Ireland, Italy, Japan, Poland, South Korea, Spain, Taiwan and the United Kingdom also registered sub-50% readings, and India’s and Turkey’s gauge showed slowing expansion, according to data from Markit.(The rare bit of good news came from Russia, which rose to 52.6% from 50.4%.)

[DemReadingDU]

35. U.S. unemployment rate falls to 8.6%

I saw on twitter. Lowest rate in 2.5 years.
How can this be? Economy seems worse to me, are unemployed people falling off the radar?


more from ZeroHedge
NFP Prints At 120K, Below Expectations Of 125K, Unemployment Rate Drops To 8.6% on Expectations of 9.0%. And for those wondering how it is possible to have such a major drop in the unemployment rate, here it is: Labor Force Participation down from 64.2% to 64.0% as ever more people leave the work force once again.
http://www.zerohedge.com/news/nfp-prints-120k-below-expectations-125k-unemployment-rate-drops-86

[AnneD]

56. If you believe the government statistics....

clap your hands.......
*crickets*

[DemReadingDU]

62. Karl Denninger: The Employment Report Is An Intentional FABRICATION

12/2/11 The Employment Report Is An Intentional FABRICATION

***This part is the original version, click link to see revision.***

I have to call this report an intentional lie. I don't buy the largest drop in "not in labor force" on an annualized basis since my charting began going back to 1999, nor do I believe the claimed 125,000 jobs when at the same time the government claims that the population of the United States went down by 1.5 million people, and of those 1.5 million people who died (above replacement rate) 1.2 million of them were "not in the labor force."

I don't recall reading about a monstrous rash of deaths (presumably mostly suicides) over the last month constituting, on average, one in 200 working-age Americans with nearly all of them unemployed.

Yet that is exactly what you have to buy in order to accept this report as factual.

I'll go on record here and now: This report is a pure and intentional fabrication.

more...
http://market-ticker.org/akcs-www?post=198461

edit to add from Denninger...
So what we have here is a report that is nowhere near as strong as it appears.
PS: The original version of this post called the report an outright fabrication. The BLS site went unavailable for nearly an hour from the time I picked up the figures until I posted the Ticker, and when it was available again the figures were in different places. Among other things the original data showed a decrease in population, and not a small one either. I have updated the graphs above from the now-available data tables. Whether this was an error in their table or in my original pick-up I cannot determine at this point as I did not save the original copy off to local disk. In any event the report is not strong on a monthly basis and the lack of recovery in the employment rate bodes ill for the ability of the government to continue to spend, which is the "big picture" argument I've made since I began this series of reports.

[DemReadingDU]

ZeroHedge: Key Charts From The NFP Report

12/2/11 Key Charts From The NFP Report: Records In Jobless Duration And People Who Want A Job As Civilian Labor Force Plunges

Here are the four most important data points and charts from today's job report: the civilian labor force declined from 154,198 to 153,883, a 315K decline despite the civilian non-institutional population increased (as expected) from 240,269 to 240,441: always the easiest way to push down the unemployment rate. Percentage wise this was a drop from 64.2% to 64.0%: the lowest since back in 1983. Naturally, this would mean that the people not part of the labor force rose, and indeed they did by 487,000 to a record 86,558 from 86,071. This also means that more people are looking for a job: and indeed, the number of "Persons who want a job now" rose by 192K to a record 6.595 million. And lastly, confirming the behind the scenes disaster of the US jobless picture, the average duration of unemployment rose to a new record 40.9 weeks from 39.4 weeks previously. And that is your "improving" jobless picture in a nutshell.

click to see the charts...
http://www.zerohedge.com/news/key-charts-nfp-report-records-jobless-duration-and-people-who-want-job-civilian-labor-force-plu

[Pale Blue Dot]

2. Oil hovers at $100 ahead of key US jobs report

SINGAPORE – Oil prices hovered above $100 a barrel Friday in Asia as traders awaited a U.S. jobs report for evidence about the strength of the U.S. economy and demand for crude.

Benchmark crude for January delivery was up 60 cents to $100.80 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to settle at $100.20 on Thursday.

In London, Brent crude was up 50 cents at $109.49 on the ICE futures exchange.

Crude has jumped from $75 during the last two months amid signs the U.S. economy will likely avoid a recession. Investors will be closely watching the Labor Department's November unemployment report later Friday for evidence economic growth is strengthening, which could justify higher crude prices.

http://old.news.yahoo.com/s/ap/oil_prices

[Demeter]

13. Natural-gas futures rally after supply report

http://www.marketwatch.com/story/natural-gas-futures-rally-after-supply-report-2011-12-01?link=MW_home_latest_news

Natural-gas futures on Thursday shot up after a weekly government supplies report showed a decline for the week ended Nov. 25. Natural gas for January delivery NG12F -0.80% added 11 cents, or 3.1%, to $3.66 per million British thermal units. Before the report, it traded around $3.56 per million Btus. The Energy Information Administration said inventories declined 1 billion cubic feet in the week, compared to expectations of a rise around 10 bcf.

[Pale Blue Dot]

3. U.S. Stock-Index Futures Advance as Investors Await Monthly Payrolls Data

U.S. stock-index futures rose, indicating that the Standard & Poor’s 500 Index will extend its biggest weekly rally since March 2009, before a report that may show employers added workers at a faster pace last month.

Bank of America Corp. (BAC), the second-biggest U.S. lender by assets, and Citigroup Inc. (C) climbed 1.4 percent in early New York trading. Western Digital Corp. (WDC) advanced 10 percent after the maker of disk drives and networking products raised its quarterly sales forecast.

Futures on the Standard & Poor’s 500 Index expiring this month advanced 1.2 percent to 1,258.8 at 6:38 a.m. in New York. Dow Jones Industrial Average futures climbed 138 points, or 1.2 percent, to 12,141 today.

The S&P 500 (SPX) rallied 7.4 percent and the market value of global equities increased by more than $3 trillion this week as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut the proportion that banks need to hold as reserve capital.

http://www.bloomberg.com/news/2011-12-02/u-s-stock-index-futures-rise-before-monthly-payrolls-report.html

[Demeter]

4. Good Morning PBD!

Who will be taking over SMW next year?

[Pale Blue Dot]

9. Great question! As a reminder to all, I will stop posting the SMW at the end of the year.

Life is getting in the way of my continued participation here, so we're going to need someone to take over posting duties if this thread is to continue. Please PM me if you're willing and able to help!

[Demeter]

5. Euro Zone Falls Short on Fund

http://online.wsj.com/article/SB10001424052970204262304577068134102293636.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Euro-zone finance ministers agreed on Tuesday on details to expand the bloc's bailout fund but acknowledged it would have less capacity to help troubled nations than once hoped, and suggested future efforts to resolve the worsening crisis would depend on the European Central Bank and the International Monetary Fund coming to their aid.

An analysis presented at the meeting suggested the fund might raise between €500 billion and €750 billion ($700 billion to $1 trillion), according to a person familiar with the matter, far short of the €1 trillion or even €2 trillion that many had expected...

[Demeter]

6. More European financial chicanery

http://www.macrobusiness.com.au/2011/11/more-european-financial-chicanery/

The changes to the EFSF has been ratified by the European Finance ministers:

Euro area Finance Ministers agreed on 29 November on the terms and conditions to extend EFSF’s capacity by introducing sovereign bond partial risk participation and a Co-Investment approach. Ministers also adopted amended EFSF guidelines concerning intervention in the primary and secondary debt markets and precautionary credit lines in order to use leverage. Klaus Regling CEO of EFSF commented “Both options are designed to enlarge the capacity of the EFSF so that the new instruments available to the EFSF can be used efficiently”.

Under the partial risk protection, EFSF would provide a partial protection certificate to a newly issued bond of a Member State. The certificate could be detached after initial issue and could be traded separately. It would give the holder an amount of fixed credit protection of 20-30% of the principal amount of the sovereign bond. The partial risk protection is to be used primarily under precautionary programmes and is aimed at increasing demand for new issues of Member States and lowering funding costs.

Under option two, the creation of one or more Co-Investment Funds (CIF) would allow the combination of public and private funding. A CIF would purchase bonds in the primary and/or secondary markets. Where the CIF would provide funding directly to Member States through the purchase of primary bonds, this funding could, inter alia, be used by Member States for bank recapitalisation. The CIF would comprise a first loss tranche which would be financed by EFSF. Chris Frankel CFO and Deputy CEO of EFSF commented “Following extensive discussions with investors covering all types and geographical regions, a number of them have given their positive views and signalled their willingness to participate.” EFSF will now implement these two approaches to be ready early in 2012 to use them effectively in the context of the guidelines for the new instruments on market interventions.

So the EFSF will now become a dual CDS and CDO, possibly with some IMF involvement. I have explained previously the issue with the facility is the conditions that come with its use:

The trouble with the EFSF is that it is backed by sovereign nations that have already been locked out of conventional markets. This obviously assumes that they are under significant financial stress and there is the high likelihood of default. This has been the case of Greece which has been under instruction from the IMF to implement economic adjustments very similar to the ones specified in the EFSF charter. For highly indebted non-export driven nations such as Italy, Portugal and Spain these measures are likely to make their underlying economies worse while they are attempting to meet their obligations to the EFSF loan. Under these circumstance there is a fair chance that something will eventually go wrong, and if recent history is anything to go by CDOs have a funny habit of under-performing, leading to the requirement for re-capitalisation and more incentives from guarantors to stop the funds from imploding. Just imagine if Greece had been under an EFSF loan over the last 12 months… Now imagine if that was Italy.

And it seems even the creators of the facility now admit that is will be an inadequate fix for the Eurozone:

… Even so, Rehn, Juncker, and Regling were quick to admit that “no one single silver bullet that will get us out of the crisis.” This statement suggests that EU leaders might already be thinking about more radical intervention—likely by the European Central Bank or in the form of eurobonds.

Rehn told reporters that the facility will fall short of its €1 trillion ($1.4 trillion) firepower goal. Journalists and investors have argued that the fund would need to be expanded further even if it reached that unlikely goal.

In other news Greece has got a little more cash:

Euro-area finance ministers approved a 5.8 billion-euro ($7.7 billion) loan to Greece under last year’s bailout after eliciting budget-austerity pledges from Greek political leaders backing a unity government.

The go-ahead for the sixth disbursement of funds under the fully taxpayer-funded package of 110 billion euros shifts the spotlight to a second rescue of Greece that foresees 50 percent losses for private investors in Greek bonds. The new aid plan, crafted at an October summit, also includes 130 billion euros in extra public funds.

After initially endorsing the next loan for Greece on Oct. 21, the euro area froze the payment this month because former Socialist Premier George Papandreou announced a referendum on the second rescue plan. He later called off the vote, resigned and was succeeded by ex-central banker Lucas Papademos, whose interim government has the support of three parties to press ahead with budget cuts needed for continued aid.

And what an amazing soap opera it was. Obviously the problem for Greece is that, as the IMF have all but admitted, austerity continues to make their economy worse so there is no doubt they will continue to require even more money in the future. They are attempting asset sales, but these have been very underwhelming to date. The 50% haircut is now in focus, although there are doubts whether it will actually occur, but even if it does, 50% isn’t really half:

Even if all private investors, banks, and insurers write down half of their Greek debt holdings, they would only reduce Athens’ liabilities by about 100 billion euros – or less than 30 percent of the total debt pile. With almost 80 billion euros invested in Greek sovereign bonds, Greek banks hold a large portion of the 200 billion euros worth of debt currently in private hands. It remains to be seen whether these troubled lenders are really in a position to take a voluntary haircut.

“A writedown would leave Greek banks requiring somewhere between 11 and 14 billion euros in fresh capital to keep afloat,” financial analyst Peter Leotsakos wrote on the online portal Bankingnews.gr. “They wouldn’t be able to raise that kind of money on the markets. The banks would need to be taken over by the European Financial Stability Facility (EFSF) until new capital becomes available,” he added.

If all Greek banks opted out of the writedown plan, the amount of debt wiped in the EU rescue plan would fall from 100 billion to just 60 billion euros – or 17 percent of total Greek debt.

There will also be some substantial flow-on effects to other nations if the haircut goes through:

Cypriot banks are badly exposed to toxic debt in Greece, and must face a write-down of Greek bonds, a so-called haircut, of 50 percent. On Tuesday, the Bank of Cyprus, the country’s biggest lender, posted an accumulated net loss of 801 million euros for the first nine-months of 2011.

In the results, the bank announced a write-down of 1.06 billion euros on Greek debt holdings as part of its agreement to take part in the latest bailout of Greece agreed at a eurozone summit in October. Economist Fiona Mullen said although Bank of Cyprus may be able to survive the write-downs required to cover the voluntary losses on Greek debt, Marfin Popular Bank will struggle to raise the additional cash needed.

“Marfin at the very least will have to beg for money from the government, which doesn’t have that kind of spare cash,” Mullen told AFP.

Cyprus isn’t alone, Romania has just been junked by S&P partly due to its Greek exposure. (Austria’s new banking policy also played its part )

[Demeter]

7. France and Germany want the stability and growth pact hurdle to move to zero percent by 2016

http://www.creditwritedowns.com/2011/11/france-germany-europe-balanced-budget-2016.html

According to Spanish website Cinco Dias, France and Germany want to move from a 3% deficit target to balanced budget by the year 2016. The website said France is working with Germany to propose a deal which will include a balanced budgets and deficit limit in national constitutions along with additional facets to ensure supranational fiscal solidarity. This aim points to a clear intention by the two countries to present a deal on fiscal integration and priorities in the coming days.

My translation of Cinco Dias is as follows:

the French Minister of Budget, Public Accounts and State Reform, Valérie Pécresse, has confirmed that France and Germany are working on a revision of Europe’s Stability and Growth Pact with the aim of giving "greater discipline to the euro area" which includes the obligation to reach a zero deficit in 2016.

In an interview with French television channel France 2 collected by the French press, Pécresse stressed that all euro area countries should impose a zero deficit target."The golden rule is to return to balance in 2016," said the minister.

Note that an adjustment to balanced budgets throughout the euro zone would require either an exactly equivalent offset in private sector savings down and/or in the export sector up. So implicitly, Germany and France are calling for a rapid and massive private sector dissaving and/or reduction in the external value of the euro area currency. I see this as a pipe dream. More likely, the cuts in the public sector will lead to a deflationary spiral via bank balance sheet deleveraging. This proposal tells you that bad things are definitely going to happen in Euroland.

[Demeter]

15. Sarkozy and Merkel seek joint solution to debt crisis

http://www.france24.com/en/http%3A/%252Fwww.france24.com/en/20111201-sarkozy-merkel-economy-eu-europe-debt-crisis-euro-zone

French President Nicolas Sarkozy used his landmark Thursday night speech on the debt crisis to announce a Monday meeting with German Chancellor Angela Merkel, which he said would result in a joint plan to "guarantee the future of Europe."

President Nicolas Sarkozy of France said Thursday that he would meet Germany’s Chancellor Angela Merkel next week and announce a joint plan to rescue Europe from its debt crisis...Germany has rejected calls for European Central Bank intervention to bail out indebted European economies because of its own painful memories of hyperinflation after World War I.

[Demeter]

39. Merkel calls for rapid EU treaty change

Angela Merkel has called for European Union treaty change to introduce as quickly as possible a legally-binding set of rules for the eurozone’s economic management.

Looking very sombre in a black suit and not deviating from her written text, the German Chancellor said in a speech to the Bundestag, the German parliament, the eurozone was not facing a debt crisis, but a crisis of confidence that would take years to resolve.

Read more >>
http://link.ft.com/r/73UJGG/XHAM4U/Q38E1/16CDCN/97INN6/T3/t?a1=2011&a2=12&a3=2

[Demeter]

10. Official Action and Why Italy is Still at the Vortex

http://www.creditwritedowns.com/2011/11/official-action-and-why-italy-is-still-at-the-vortex.html

The focus is on next week’s ECB meeting and the EU summit. Nearly every one is expecting a 25 bp rate cut and if expectations are wrong, it is more likely that it is because of more aggressive action, like a 50 bp cut, than less. Separately, it will also likely provide long-term refi operations. It currently has a 1 year repo outstanding and next month will offer 13-month money that covers two year end periods. Next week it may offer 2-3 year money. It may also liberalize its collateral rules again...The EU Summit is the last opportunity of the year, and some observers say the last opportunity period, for action that will begin seriously addressing the crisis. France’s Sarkozy is expected to present his proposals Thursday and Germany’s Merkel Friday...Germany and French proposals to expedite a fiscal union are important, but watch what Italy does. Before the summit, Italy will likely announce a new package of austerity that will take several important steps toward what Merkel and Sarkozy have in mind that are necessary for fiscal union. Italy’s technocrat-led government will likely propose more austerity than envisioned by the Berlusconi government and will make more realistic assumptions on growth, preparing, for example, for a 0.5% contraction, which is what the OECD projects. A wealth tax of sorts also seems likely.

Note that during the run-up to EMU, Italy’s economy was stagnant, with a current account deficit, and still managed to reduce its deficit. A 0.6% tax on savings was implemented. A property tax on large holdings (larger than 1 mln euros) or another savings tax is possible. Pension reform and labor market reforms are also likely. In addition to these austerity measures, fiscal convergence also requires more credible oversight of public finances. One of the things that Merkel and Sarkozy are likely to call for is a independent body to oversee public finances, make budget forecasts and provide a scorecard. The Monti government is likely to do precisely this. Many pundits talk about the pressure on Germany and ECB to capitulate, but that is only half the story. The other half is that pressure on countries to cede some more fiscal autonomy is also great...



The cut in the rates dollar funding can be secured through the Fed’s swap lines today is noteworthy. It may address some funding pressure, but the forces on the other side seem stronger still. Downgrades and asset sales and credit line reductions all point to continued funding challenges. There is also a stigma to accessing those swap lines. Part of the reason they were not used may be partly because of price, but in recent days the cross currency swap appears to have been risen to levels that made the punitive rate from the Fed more competitive. European banks need to refinance an estimated 800 bln euros next year. More valuable than the cut in the swap rate today would have been follow through on the European promise for an EU-wide bank guarantee scheme like they had in 2008-2009.

Banks, including Spanish, French and Italian banks, have relied more on borrowings from the ECB. Banks have also used liquidity swaps to create billions of euros of assets that can be used as collateral to borrow even more from the ECB. The FSA has identified these liquidity swaps as a transmission mechanism for systemic risk.

[Demeter]

12. EU bank watchdogs demur on tighter stress test

http://uk.reuters.com/article/2011/12/02/uk-europe-bank-stresstest-idUKTRE7B100J20111202

Europe's banking watchdogs have agreed to refrain from a further tightening of the "stress test" rules for the region's banks, who are struggling to boost the capital buffers by a mid-2012 deadline, a German newspaper reported.

The European Banking Authority (EBA) and national supervisors from the EU's 27 member states reached an accord on Wednesday after a telephone conference lasting several hours, Handelsblatt newspaper said in an excerpt of an article to be published on Friday, citing a person familiar with the talks.

The agreement is expected to be formally approved by the EBA at a meeting next week, the paper said.

"It is unlikely that something will change," the paper quoted a regulatory source as saying...

[Demeter]

19. The dash for cash Europe’s troubled banks are running out of money

http://www.economist.com/node/21541019

USUALLY it is banks that put customers under a microscope before lending them a penny. But in Europe banks are the ones now facing scrutiny before investors, companies and savers will lend them any cash. Faced with an investor strike, banks are putting a halt to new loans and selling or pawning all they can. Unless the investor strike lifts soon, Europe risks a credit crunch. At worst, there may even be bank runs and failures...In one sense, a slow bank run is already taking place in the market for bank bonds, which in happier times provide the long-term and stable funding that allows bank regulators to sleep peacefully at night. Since July these markets have frozen up almost completely for European banks. Bond issuance has plunged (see chart) and has shifted towards secured bonds, which are backed by assets that investors can grab if the bank defaults. David Lyon of Barclays Capital, an investment bank, reckons that just €17 billion ($24 billion) in unsecured European bank bonds have been sold since the end of June, compared with €120 billion in the same period a year earlier. “In the context of the requirement, this is a paltry amount of funding,” he says.

The run on European bank-funding markets in some respects mirrors the one taking place in some government-bond markets. This is to be expected given the links between banks and governments. During the 2008 crisis, governments propped up their banks. Now, governments are leaning on banks to keep buying their bonds. As a result even the strongest banks from peripheral euro-area countries such as Spain or Italy (where yields on an auction of three-year government bonds surged to an unsustainable 7.9% on November 29th) are finding it hard to borrow from investors...Yet the bond-buyers’ strike afflicting banks is more worrying than the sovereign one. No banks are regarded as havens in the way that British and German government bonds provide a refuge for investors. Even strong banks in “core” euro-area countries are being frozen out of markets. A second vital source of funding is borrowing through short-term interbank markets or tapping money markets. Both of these are also drying up. American money-market funds, which were a big source of dollars for the European banking system, have reduced loans by more than 40% over the past six months...Banks are reluctant to lend to one another except for the shortest possible time, usually overnight. “Every night for the past few months have been getting reports saying they are short of a few billion,” says one banker. “They take the phones and start calling all the other banks to ask if they can borrow €100m here and some there.” For now, this is keeping the system ticking over, partly because a bank lending money overnight knows it may have to ask for the favour to be returned next week. Euro-area central banks are also leaning heavily on their biggest banks to keep supporting the smallest with interbank loans...An area of particular vulnerability, the “nightmare scenario” in the words of one banker, is that the trickle of deposits leaking from banks in peripheral countries turns into a full-flood bank run. The risk that savers will lose faith in banks seems remote for now. Yet it is not unthinkable. Greek depositors have been shifting their money for the past year. Savers in Italy and Spain now appear to be starting to do the same. And large corporations, which are able to shift deposits easily, are seeking relative safety, either with large banks in core countries or further afield.

Tighten belts and brace yourself

Max Warburton, an analyst at BernsteinResearch, notes that German carmakers are now buying German government bunds or are quietly moving their money directly to the European Central Bank (many of them already have banking licences because they provide car loans). “We don’t believe they are at the stage of buying gold…but perhaps it’s not far off,” he wrote in a recent report. Banks are responding by desperately hoarding the cash they have, selling assets and slowing new lending. The most recent survey of credit conditions in the euro area shows a sharp tightening in September. The effects are being felt far more widely than in the euro area. In central and eastern Europe borrowers fret about regulatory changes that are encouraging banks in Sweden and Austria to cut their cross-border exposures. In Asia, too, the withdrawal of European banks is likely to drive up borrowing costs and restrict the availability of credit, according to analysts at Morgan Stanley, an investment bank. Yet unless funding markets reopen, even aggressive deleveraging by banks will probably not allow them to shrink their balance sheets quickly enough.

This suggests a need for more action by central banks. On November 30th a group of central banks introduced new measures to ease a shortage of dollars in the banking system (see article). That will ease the pressure, but banks also need help raising longer-term debt. The ECB currently offers one-year loans, but these give little comfort to banks, which generally lend to their clients for longer periods and are reluctant to write new loans unless they can find matching funding. Another option could be for governments to guarantee bank debt, but strained national accounts probably rule this out...Inaction could be disastrous. The longer banks are unable to raise funding, the greater the chance that one may fail. As one banker ominously puts it: “you are getting further along the train tracks towards the buffers.”

[Po_d Mainiac]

31. “We don’t believe they are at the stage of buying gold…but perhaps it’s not far off,”

Wanna know when the fat lady is blasting out a melody? Well now u know.

[AnneD]

59. When the fat lady sings...

it will be Wagner's "Das Rheingold".

[Demeter]

21. Central Bank Chief Hints at Stepping Up Euro Support

http://www.nytimes.com/2011/12/02/business/global/draghi-hints-again-at-rate-cut-in-europe.html?_r=1&adxnnl=1&adxnnlx=1322828991-NQpl8JDh+eIjzxRRBTko6g

Mario Draghi, the president of the European Central Bank, laid the groundwork for a more aggressive response to the debt crisis Thursday, suggesting that the bank could increase its support for the European economy if political leaders took more radical steps to enforce spending discipline among members...In the run-up to a meeting of European leaders late next week, Mr. Draghi’s remarks seemed to be part of a larger effort by the bank and the region’s biggest economic powers — Germany and France — to lay the foundation for a broader rescue without seeming to compromise their principles. Later in the day Thursday, the French president, Nicolas Sarkozy — acknowledging the region’s debt crisis — announced that he and the German chancellor, Angela Merkel, would meet in Paris on Monday “to make French-German propositions to guarantee the future of Europe.”

Last weekend, Germany and France began floating a plan to hold member nations of the euro currency union more financially accountable to their fellow members by giving European Union officials the power to vet and approve their national budgets. Euro zone agreement to such a proposal is seen as a possible precondition to increased financing by the central bank, to which Germany and France are the biggest contributors.

Mr. Draghi, in the manner of central bankers, made no explicit promises on Thursday. And the quid pro quo he offered governments was indirect. But his remarks illuminated how the bank might answer increasingly desperate calls for the bank to escalate its intervention in bond markets without violating its own mandate or alienating Germany, where opposition to a central bank bailout of Greece or Italy continues to run deep. Speaking to the European Parliament in Brussels, Mr. Draghi stopped well short of offering a European version of the sort of large securities purchases that the United States Federal Reserve has used to try stimulating the American economy. But he seemed to be saying that the bank would use its virtually unlimited resources to keep financial markets at bay, if government leaders in the euro region agreed to do their part by addressing the structural flaws that had allowed the debt problems of Greece to mutate into a threat to the global economy...

[Demeter]

22. The IMF-ECB ‘Plan’ – Fig-Leaf upon Fig-Leaf

http://www.nakedcapitalism.com/2011/11/moslerpilkington-the-imf-ecb-%E2%80%98plan%E2%80%99-%E2%80%93-fig-leaf-upon-fig-leaf.html

Politics in the Eurozone has turned into a strange and tragic farce in the recent weeks and months. While the peripheral countries continue to judge successful economic policy on the amount of tax liabilities they can levy to smother their depressed economies, the big dogs play various games in which they try to hide their shame behind ever more sophisticated veils. Their ‘shame’, of course, being that the ECB, the issuer of the euro, has to ultimately write the check in order to fund the peripheral countries whether they like it or not...The latest Euro fashion is for the IMF to fund distressed sovereigns while being, in turn, funded by the ECB – while all this includes the fashiony gimmick that the IMF guarantees the loans.

The end result, of course, is that the ECB writes the check – which is precisely what it takes to make any of these schemes work. In fact, whenever you hear of any of these wacky evasions… er… sensible proposals, you can be safe in the knowledge that it will always work as long as it is the ECB writing the check. But we digress; and so here is how this latest one scheme will function: When the ECB buys European national government bonds it credits member bank accounts on the ECB’s spreadsheet. Those accounts count as ‘money’ while the bonds did not count as ‘money’ and so, this action is said to be ‘printing money’ – and printing money is bad for some reason or other according to our German friends… and so the ECB undertakes a further step: sterilisation. The ECB offers different euro accounts – which are also just numbers on an ECB spreadsheet – with relatively short maturities that pay interest. This is called ‘sterilisation’ because these deposits don’t technically count as money. Cool, huh? Now, the German Eurocrats have made it clear that they do not want any of this currency issuing ‘foolishness’ no matter what amount of sterilisation is occurring. So, instead they call up their friends at the IMF...When the ECB buys Special Drawing Rights from the IMF it credits an IMF account with the required euros. This does not count as ‘printing money’. And when the IMF loans those funds on to Italy or whoever, it does not count as ‘printing money’ either even though, when all is said and done, the same euros sit in the same ECB accounts and they effectively come from the same place. How clever.

Now stretch your mind’s logical capacity with us for a moment because the IMF was originally set up after World War II to deal with balance of payments issues. And we can kinda sorta say that various European nations suffer from balance of payment issues – so, when the IMF steps in its kinda sorta playing its supposed institutional role.

But here is the really great part: the IMF is already a well-known (and much hated) institution obsessed with imposing austerity on the countries they ‘assist’. This means that they have plenty of experience ruining economies… er… promoting ‘expansionary fiscal consolidations’. With all this experience the IMF will be in a prime position to ignore all the evidence coming out of the Eurozone and continue the drive to force the periphery into depression. Hoorah!

[Demeter]

25. Abandoning a sinking ship? A plan for leaving the euro

http://yanisvaroufakis.eu/2011/11/27/abandoning-a-sinking-ship-a-plan-for-leaving-the-euro/

As regulars of this blog know, I am of the view that the eurozone’s collapse will be a harbinger of a postmodern 1930s. While virulently opposed to the eurozone’s creation, in its time of crisis I have been campaigning for saving the euro. Of course, as Alain Parguez wrote aptly here, it is impossible to save someone, or something, that does not want to be saved. In this post, while not going back on my personal commitment to keep trying to save a monetary union bent on self-destruction, I shall relate to you an idea on how a peripheral member-state could try to minimise the (huge) socio-economic costs of an exit from the eurozone forced upon it by the latter’s steady disintegration...The said plan was put together with Ireland in mind. Its authors are Warren Mosler (an investment manager and creator of the mortgage swap and the current Eurofutures swap contract) and Philip Pilkington, a journalist and writer based in Dublin, Ireland. Their starting point is a (perfectly spot on) diagnosis: “austerity programs” are “an abject failure and yet European officials continue to consider them the only game in town. So, we can only conclude at this stage that, given that European officials know that austerity programs do not work, they are pursuing them for political rather than economic reasons.”

For reasons that I have also put forward repeatedly, unless overturned, this political project will, perhaps unintentionally, lead to the eurozone’s collapse. Should a country like Ireland wait until the bitter end or should it prepare for an exit before the final nail has been hammered into the euro’s coffin? Mosler and Pilkington argue for an exit. But how can Ireland, or for that matter Portugal or Greece or Italy, exit without the sky falling on our heads? Here is what they propose:

1. Upon announcing that the country is leaving the Eurozone, the government of that country would announce that it would be making payments – to government employees etc. – exclusively in the new currency. Thus the government would stop using the euro as a means of payment.

2. The government would also announce that it would only accept payments of tax in this new currency. This would ensure that the currency was valuable and, at least for a while, in very short supply.

And that is pretty much it. The government spends to provision itself and thereby injects the new currency into the economy while their new taxation policy ensures that it is sought after by economic agents and, thus, valuable. Government spending is thus the spigot through which the government injects the new currency into the economy and taxation is the drain that ensures citizens seek out the new currency.

The idea here is to take a ‘hands off’ approach. Should the government of a given country announce an exit from the Eurozone and then freeze bank accounts and force conversion there would be chaos. The citizens of the country would run on the banks and desperately try to hold as many euro cash notes as possible in anticipation that they would be more valuable than the new currency...Under the above plan, however, citizens’ bank accounts would be left alone. It would be up to them to convert their euros into the new currency at a floating exchange rate set by the market. They would, of course, have to seek out the currency any time they have to pay taxes and so would sell goods and services denominated in the new currency. This ‘monetises’ the economy in the new currency while at the same time helping to establish the market value of said currency.

My reaction to this plan is simple: It is a blueprint for anyone who thinks that the euro system is past the point of no return. Once that point has been and gone, it is perhaps essential to move into this direction swiftly. However, I do not believe that the eurozone is, presently, past the point of no return. It is still possible to salvage the common currency by means of something akin to our Modest Proposal. It may take more intervention by the ECB than the Modest Proposal envisions (courtesy of the awful delay in implementing a rational plan, continuing instead on the present unsustainable path) but it is still, I think, feasible. The reason why I am adamant that this is not, yet, the time to abandon ship, is the huge human cost of the eurozone’s breakdown. Consider for example what will happen if we, indeed, adopt the exit plan proposed above.

All contracts by the government to the private sector (abroad and domestically) will be renegotiated in the new currency after the initial depreciation of the latter. In other words, domestic suppliers will face a large haircut instantly. Many of them will declare bankruptcy, with another large lump sum loss of jobs.

The banks will run dry and will not be kept open by the ECB. Which means that the only way Ireland or Greece or whoever adopts this plan can keep its banks open is if they are recapitalised in the new domestic currency by the Central Bank. But this means that bank account deposits will, de facto, be converted from euros to the new currency; thus annulling the beneficial measure of no compulsory conversions of bank holdings into the new currency (see above).

The authors claim that the above ill effects will be lessened by the government’s new found monetary independence which will enable it to discontinue austerity programs immediately and adopt counter-cyclical fiscal policy, as Argentina did after its default and discontinuation of the pesos-dollar peg. This may be so but all comparisons with Argentina must be taken with a large pinch of salt. For Argentina’s recovery, and associated fiscal policies, was far less due to its renewed independence and much more related to a serendipitous rise in demand for soya beans by China.

While it is true that the weaker currency will boost exports, it will also have a devastating effect: The creation of a two tier nation. One nation that has access to hoarded euros and another that does not. The former will acquire immense socio-economic power over the latter, thus forging a new form of inequality that is bound to operate as a break on development for a long while – just like the inequality that sprang up in the post 1970s period did enormous damage to our countries’ real development (as opposed to GDP growth numbers) in the second postwar phase.

Last, but certainly not least, even if one country exits the eurozone in this manner, the eurozone will unwind within 24 hours. The European System of Central Banks will break instantly down, Italian spreads will hit Greek levels, France will turn instantly into a AA or AB rated country and, before we can wistle the 9th Symphony, germany will have declared the re-constitution of the DM. A massive recession will then hit the countries that will make up the new DM zone (Austria, the Netherlands. possibly Finland, Poland and Slovakia) while the rest of the former eurozone will labour under significant stagflation. The new intra-European currency wars will suppress, in unison with the ongoing recession/stagflation, international and European trade and, therefore, the US will dive into a new Great Recession. The postmodern 1930s that I keep speaking of will be a tragic reality.

In summary, this plan may end up being the only way out of a vessel heading for the rocks. We must keep it in mind given that our European leaders’ bloodymindedness has put, and keeps, a whole Continent on the rock-bound path. But it is not time yet to adopt it. For it will come at an incredible human cost; a cost that can still be averted (assuming that I am right in saying that the point of no return has not been reached – yet). We still have a chance to storm the bridge and change course. Failing that, a plan like that by Mosler and Pilkington may be the equivalent of our lifeboats. We should, however, always keep in mind that our lifeboats will be launched in icy seas and, while stranded on them, many will perish.

[Demeter]

27. Mosler/Pilkington: Response to Yanis Varoufakis Regarding Our Eurozone Exit Plan

http://www.nakedcapitalism.com/2011/12/moslerpilkington-response-to-yanis-varoufakis-regarding-our-eurozone-exit-plan.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Recently the Greek economist Yanis Varoufakis responded to the euro exit plan that we published on Naked Capitalism a few days ago. While Varoufakis was broadly supportive of the plan if an exit was absolutely necessary, he criticised some of the details therein... We both agree with Varoufakis that this would probably be a more painful option than simply staying in the currency union even with the current austerity programs in place. In addition to this, both of us have published pieces arguing that the Eurozone will likely weather this crisis and the ECB, in some shape or form, will probably step in to backstop the debt of the peripheral governments in the coming months. We merely published our sketch of an exit plan because both of us believe that it is always good to have a Plan B at the ready should any contingencies arise. We also think that having a viable plan in hand strengthens peripheral governments bargaining power vis-à-vis their neighbours.

But more on this in a moment. First, let us deal with some of the issues that Varoufakis raised. (All numbered points in are Varoufakis’, our response SEE LINK FOR DETAILS):

1. All contracts by the government to the private sector (abroad and domestically) will be renegotiated in the new currency after the initial depreciation of the latter. In other words, domestic suppliers will face a large haircut instantly. Many of them will declare bankruptcy, with another large lump sum loss of jobs.



2. The banks will run dry and will not be kept open by the ECB. Which means that the only way Ireland or Greece or whoever adopts this plan can keep its banks open is if they are recapitalised in the new domestic currency by the Central Bank. But this means that bank account deposits will, de facto, be converted from euros to the new currency; thus annulling the beneficial measure of no compulsory conversions of bank holdings into the new currency.



3. The authors claim that the above ill effects will be lessened by the government’s new found monetary independence which will enable it to discontinue austerity programs immediately and adopt counter-cyclical fiscal policy, as Argentina did after its default and discontinuation of the pesos-dollar peg. This may be so but all comparisons with Argentina must be taken with a large pinch of salt. For Argentina’s recovery, and associated fiscal policies, was far less due to its renewed independence and much more related to a serendipitous rise in demand for soya beans by China.



4. While it is true that the weaker currency will boost exports, it will also have a devastating effect: The creation of a two tier nation. One nation that has access to hoarded euros and another that does not. The former will acquire immense socio-economic power over the latter, thus forging a new form of inequality that is bound to operate as a break on development for a long while – just like the inequality that sprang up in the post 1970s period did enormous damage to our countries’ real development (as opposed to GDP growth numbers) in the second post-war phase.


5. Last, but certainly not least, even if one country exits the eurozone in this manner, the eurozone will unwind within 24 hours. The European System of Central Banks will break instantly down, Italian spreads will hit Greek levels, France will turn instantly into a AA or AB rated country and, before we can whistle the 9th Symphony, Germany will have declared the re-constitution of the DM. A massive recession will then hit the countries that will make up the new DM zone (Austria, the Netherlands. possibly Finland, Poland and Slovakia) while the rest of the former eurozone will labour under significant stagflation. The new intra-European currency wars will suppress, in unison with the ongoing recession/stagflation, international and European trade and, therefore, the US will dive into a new Great Recession. The postmodern 1930s that I keep speaking of will be a tragic reality.



Lastly, we should note that, should a nation exit the Eurozone in the manner we have outlined, a worldwide deflationary collapse might actually work to their advantage. Why? Because with their new currency they could undertake an Argentinean-style jobs guarantee program which would maintain full employment domestically while real terms of trade shifted dramatically in their favour as worldwide prices fell. Or, to put it another way: peripheral countries like Ireland would no longer have to rely on export-oriented growth in a world plagued by massive deflationary contraction. Instead they could run fiscal deficits to maintain full employment and high living standards while having little concern for the potential devaluation of the new currency caused thereby because worldwide prices would be falling at the same time.

[Demeter]

29. GERALD CELENTE: Prepare for an Economic 9/11 and Economic Martial Law

VIDEO AT LINK--PREDICTIONS FOR 2012

[DemReadingDU]

34. Link?

[Demeter]

36. ooPS

http://www.informationclearinghouse.info/article29858.htm

I SHOULDN'T TRY TO DO TWO THINGS AT ONCE...

[Hotler]

67. Nature of the Free Markets sir.

May I offer you some cheese with that whine? Mr. Celente just now figuring out that the banks are crooks? Sounds like sour grapes to me. On the other hand he did speak a lot of truth but, the folks at SMW already know the truth.

[Demeter]

70. Maybe

but I don't know if I can HANDLE the truth, not anymore, nor any more truth, either.

I feel like I'm camping out in my own life...not even Occupying it, if you catch my existential anxiety...

[Hotler]

76. I'm with you.

I myself feel like I'm in a strange place. It's like I'm outside looking in, disconnected yet connected kinda sort of. It's an odd feeling. Calm before the strom? We know there is a shit storm coming. I wish it would get here so we can get it over and done with.

[DemReadingDU]

82. I'm with both of you

[Demeter]

48. You are all wrong, printing money can halt Europe's crisis By Ambrose Evans-Pritchard

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100013558/you-are-all-wrong-printing-money-can-halt-europes-crisis/

..A near universal view has emerged that Europe's crisis can only be solved by governments and fiscal policy, with varying views over the proper dosage of pain.

I beg to differ. This is a monetary crisis, caused by a jejune central bank that aborted a fragile recovery by raising rates earlier this year, allowed the money supply to collapse at vertiginous rates in southern Europe, and caused a completely unnecessary recession — and a deep one judging by the collapse in the PMI new manufacturing orders in November.

Needless to say, drastic fiscal austerity is making matters a lot worse. You cannot push two-thirds of the eurozone into synchronized fiscal and monetary contraction without consequences.

Note that five-year break-even spreads have dropped below zero for Italy, meaning that markets are now pricing in outright deflation. For a country with public debt stock of 120pc of GDP, that is a death sentence...

[Prometheus Bound]

81. I set the comments on 'best rating'. His readers definitely don't buy that.

No. 1: 298 recs

Desperately incoherent article.

You don't seem to understand that lots of us want the EU to die a horrible death because the alternative is the creation of a corporatist tyranny from which there would be little chance of escape in our lifetimes.

[Demeter]

49. Killing the Euro By PAUL KRUGMAN

http://www.nytimes.com/2011/12/02/opinion/krugman-killing-the-euro.html?ref=opinion

Can the euro be saved? Not long ago we were told that the worst possible outcome was a Greek default. Now a much wider disaster seems all too likely.

True, market pressure lifted a bit on Wednesday after central banks made a splashy announcement about expanded credit lines (which will, in fact, make hardly any real difference). But even optimists now see Europe as headed for recession, while pessimists warn that the euro may become the epicenter of another global financial crisis.

How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. Turn on your TV and you’re very likely to find some pundit declaring that if America doesn’t slash spending we’ll end up like Greece. Greeeeeece!

But the truth is nearly the opposite. Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole. And their efforts to fix matters by demanding ever harsher austerity have played a major role in making the situation worse...

[Demeter]

53. Sweden and the euro: Out and happy

http://www.economist.com/node/21541032

WHEN Swedes voted in 2003 on whether or not to join the euro, most political and business leaders were strongly in favour. Today even the euro’s supporters are grateful to the 56% of voters who said no. As worried investors push up yields on government bonds right across the euro zone, yields on Swedish ten-year bonds have fallen to 1.7%, more than half a point below German Bunds...Anders Borg, the finance minister, still thinks that in the long run Sweden should join the euro. But he seems happy to be out for now. Fears that Sweden, a small export-based economy, might suffer if it kept the krona were a strong pro-euro argument in 2003. Yet Mr Borg says that Sweden has gained something from standing aside. “Being an outsider, you must make sure your competitiveness and public finances are in order. We have had to impose on ourselves a self-discipline that euro countries did not feel they needed. If you know the winter will be very cold, you have to ensure the house has been built well. Otherwise you will freeze.”

In Sweden this translates into tight fiscal policy, a budget surplus of some 0.1% of GDP and a shrinking public debt. With memories still fresh of the banking and housing bust in the early 1990s, all political parties accept the need for sound public finances. Exports fell after the financial crisis in 2008 but have bounced back, helped by a weaker krona. Last year GDP expanded by 5.7%. This year it may grow by another 4.4%; third-quarter figures were better than expected. Yet Sweden will be hurt by the euro zone’s troubles. Exports make up half of GDP and many companies report slowing foreign demand. Growth could drop below 1% next year...The centre-right government plans to impose stricter capital rules on Sweden’s four big banks (Handelsbanken, Nordea, SEB and Swedbank) than elsewhere. The finance ministry wants to see tier one capital worth 12% of risk-weighted assets by 2015, five points above the Basel minimum. The aim is to avert any chance of Swedish taxpayers again paying for “irresponsible risk-taking”.

Mr Borg often urges fiscal prudence on his European colleagues. Sweden has given emergency loans to Ireland, Latvia and Iceland as they, according to Mr Borg, have shown a credible ambition to clean up their economic mess. He is less forgiving of Italy and Greece, saying they need to do much more. It is a pity that Sweden is too small to make much impact on the wider European economy—and that Mr Borg has so often found himself preaching to the deaf.

[Demeter]

8. Pepper Spray Developer: It Has Become Fashionable to Use Chemicals on People with Opinions

http://dissenter.firedoglake.com/2011/11/29/pepper-spray-developer-it-has-become-fashionable-to-use-chemicals-on-people-with-opinions/

In what appears to be his first television interview on the subject, Kamran Loghman, the developer of weapons-grade pepper spray and the policy for its use by US police departments, appeared on Democracy Now! to condemn how police forces have been using pepper spray on peaceful protesters in the country. He said he was “shocked” and bewildered to see UC Davis police pepper spraying students and the first thing that came to his mind was how the students could be his children “sitting down having an opinion” and being shut down forcibly by chemical agents.

Democracy Now! host Amy Goodman opened the segment by noting how it was not “unprecedented for an inventor to voice regrets when an invention turns out to have harmful uses.” She highlighted Alfred Nobel, who is believed to have regretted inventing dynamite, and Alfred Einstein, who felt guilty that his work had helped spur the invention of the atomic bomb. She said Loghman is now someone who could be added to the list of inventors that have had problems with how their inventions were used.

Loghman worked with the FBI on the research & development of pepper spray, which was tested over the course of three years in the 1980s. He described the development during the segment along with the ingredients in pepper spray...

PODCAST AT LINK

As Jon Stewart said on The Daily Show last night, “Pepper spray has become America’s car horn.” Or a prime example of how militarized police forces in America have become and how police will be used to intimidate and suppress people who engage in peaceful protesting.

FROM COMMENTS:

"It is becoming more and more fashionable right now, this day and age, to use chemical on people who have a liberal opinion."

Sorry, I had to fix that one! The teabaggers waved loaded guns around at political rallies but none of them were ever pepper sprayed. Not once!

In response:

Ok, true. Guns would never be tolerated at Occupy protests. But, it is worth emphasizing the fact that the Tea Party protests posed no threat to the structures of power ever. The members may have complained about loss of liberty but never tried to push back against whatever they thought was costing them their liberty. There weren’t any sit-ins, no acts of civil disobedience. Their very nature was complacent and lethargic. They sat in lawn chairs on the National Mall during Glenn Beck’s rally.

In response:

"They sat in lawn chairs on the National Mall during Glenn Beck’s rally."

…And waved guns… Not to put too fine a point on it but I think that sort of trumps ideology.

[Po_d Mainiac]

28. Einstein, Alfred

(b Munich, 1880; d El Cerrito, Calif., 1952). Ger. scholar and writer (Amer. cit. 1945). Ed. Zeitschrift für Musikwissenschaft 1918–33; mus. critic Münchner Post 1919–27, Berliner Tageblatt 1927–33. Ed., 9th–11th edns. Riemann's Musiklexikon (1919, 1922, 1929). Lived in London and It. 1933–9; settled in USA 1939. Prof. of mus., Smith Coll., Northampton, Mass., 1939, later teaching at other Amer. univs. Rev. Köchel's Mozart catalogue 1937. Books incl. History of Music (1917, and many later edns.), Gluck (1936), Mozart, his character, his work (1945), The Italian Madrigal (1949), Schubert (1951). No relation to the physicist Albert Einstein.

[Demeter]

69. Purpose?

[Fuddnik]

79. I thought his last name was Neuman

[Demeter]

11. MF Global Accounting Technique Under Review, Schapiro Says

http://www.businessweek.com/news/2011-12-02/mf-global-accounting-technique-under-review-schapiro-says.html

An accounting technique used by MF Global Inc., the failed broker-dealer, is being reviewed by the U.S. Securities and Exchange Commission, agency Chairman Mary Schapiro said. The SEC is in talks with the Financial Accounting Standards Board, which sets accounting standards, about “repurchase-to- maturity” agreements that MF Global used in off-balance-sheet accounting, Schapiro said today during a hearing before the U.S. Senate Agriculture Committee in Washington. “We are talking with FASB about whether we need more disclosure of those,” Schapiro said. They are the only type of repurchase agreements that can be used off balance sheet, she said, speaking alongside Commodity Futures Trading Commission Chairman Gary Gensler. Both the SEC and FASB also are looking into whether the methods MF Global used to account for its investments in European debt were legal.

“How is it possible that someone is able to bet the farm here, multiple times, and it disappears from the balance sheet because of this repo-to-maturity technique?” asked Senator Kent Conrad, a North Dakota Democrat, noting that the technique made it appear as though the risk had been “sold.” “That is a loophole so big you can drive a Mack truck through it,” Conrad said. “If that’s not closed, we should ask ourselves what we’re doing.”

European Bet

MF Global Holdings Ltd., the parent company of the broker once run by former New Jersey Governor and Goldman Sachs Group Inc. co-chairman Jon Corzine, filed the eighth-largest U.S. bankruptcy after a wrong-way $6.3 billion bet on bonds of some of Europe’s most indebted nations...To execute his European debt trade, Corzine used repurchase agreements, or agreements to repurchase in the near future at an agreed-upon price. In earnings calls, MF Global said it was seeking to profit from the difference between the yield it received on the European bonds and the interest rates it paid under the repurchase agreements. While MF Global disclosed in a May 20 filing that its net holdings among five European countries was $6.3 billion, it also said the figure was “net of hedging transactions.” The firm had actually expanded its bets to $11.5 billion as of June 30, according to data in the SEC filings.

Account Shortfall

James Giddens, the trustee overseeing the liquidation of the broker-dealer, has said the shortfall in MF Global’s U.S. segregated customer accounts may exceed $1.2 billion. Many of MF Global’s customers were farmers who used futures accounts to hedge prices for grain and other products. “The economic welfare of the U.S. relies on people being able to protect themselves against price risks -- of corn or oil or wheat or interest rates going up or down,” Gensler said when asked about the importance of restoring confidence in commodity markets...Separately, Gensler said the CFTC may consider tightening regulations on how segregated accounts are defined. “It’s pretty straightforward; segregated accounts are meant to be segregated,” Gensler said. “We did as an agency back in 2005 widen that. It’s my hope we can narrow that back down again.”

MORE

[Demeter]

42. MF Global accessed client funds for weeks

US authorities say broker-dealer had been doing so for weeks before its failure – rather than just in its final days as had been previously reported

Read more >>
http://link.ft.com/r/2SRI11/HY3UI8/RP6QL/R31210/R38VG9/JY/t?a1=2011&a2=12&a3=2


AS YVES SMITH SAYS: Holy shit. If Corzine does not go to jail, something is very wrong with this picture. He signed Sarbox certifications that his internal controls were in order.

[xchrom]

16. it's morning, right?

:donut:

[Demeter]

18. Well, the sky is lightening

My sleep cycles are disturbed, again...but the sun doesn't lie.

[xchrom]

20. sorry about that..... i've been having 3.ooam wake up pretty regular lately.

i hate it x(

[Demeter]

17. U.S. banks ask for more time on Volcker rule

http://www.reuters.com/article/2011/12/01/financial-regulation-volcker-idUSKBNKFIN20111201

Large U.S. banks are asking regulators for more time to comment on a proposed rule to implement a ban on proprietary trading that Wall Street bitterly opposes. In a Nov. 30 letter to regulators, lobbying groups representing the banks said the so-called Volcker rule was so complex that the comment period should be extended beyond the Jan. 13 deadline. The proposed rule was released in October. "Our members are deeply concerned about the potential impact of the proposal on capital formation, markets and liquidity for a range of asset classes and on the safety and soundness of banking entities and the businesses in which they engage," said the letter, which was signed by the American Bankers Association, the Financial Services Roundtable, the Securities Industry and Financial Markets Association, the Financial Services Forum and the Institute of International Bankers.

The groups, which represent banks such as JPMorgan Chase , Bank of America and Goldman Sachs , sent the letter to the Federal Reserve, the Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency and the Securities and Exchange Commission. The groups said the Commodity Futures Trading Commission had yet to release a proposal on the part of the ban it would be responsible for enforcing. They asked the regulators to extend the comment period for 90 days beyond Jan. 13 or for 60 days after the CFTC releases its proposal, whichever comes later.

The Volcker rule would prevent banks that receive government backstops like deposit insurance from making risky trades with their own funds in securities, derivatives and other financial products. It was named for former Fed Chairman Paul Volcker, who championed the measure. The rule was included in the 2010 Dodd-Frank financial oversight law, enacted in response to the 2007-2009 financial crisis. The rule would also prohibit banks from investing in or sponsoring, beyond a small amount, hedge funds or private equity funds.

The Obama administration has pushed back against attempts to slow down implementation of any part of Dodd-Frank. "If these efforts to weaken reform are successful, then consumers will be more vulnerable to future abuse, businesses will be more vulnerable to future contractions in credit availability caused by financial mistakes, and the economy will be more vulnerable to devastating crises," Treasury Secretary Timothy Geithner said in a speech on Thursday addressing financial reform in general. He did not specifically mention the Volcker rule.

[xchrom]

23. europe: Germany's Merkel fights for euro

http://uk.reuters.com/article/2011/12/02/uk-eurozone-idUKTRE7AS07Y20111202

(Reuters) - German Chancellor Angela Merkel called on Friday for rapid EU treaty change to remedy the root causes of the euro zone's debt crisis but warned that Europeans faced a long, hard "marathon" to restore lost credibility.

Outlining a long-term approach to tighter fiscal integration in the single currency area, with tougher budget discipline, she dismissed quick fixes such as massive Fed-style money printing by the European Central Bank or issuing joint euro zone bonds.

"Resolving the sovereign debt crisis is a process, and this process will take years," Merkel told parliament, vowing to defend the euro, which she said was stronger than Germany's former deutschemark.

"The European Central Bank has a different task from that of the U.S. Fed or the Bank of England," the German leader said.

[xchrom]

24. Euro zone PPI up less than expected in October

http://uk.reuters.com/article/2011/12/02/uk-eurozone-ppi-idUKTRE7B10K520111202

(Reuters) - Euro zone producer prices rose less than expected month-on-month in October and core producer prices fell, data showed on Friday, as the rise in energy costs was partially offset by a drop in prices of intermediate goods.

The European Union's Statistics Office Eurostat said prices at factory gates in the 17 countries using the euro rose 0.1 percent month-on-month in October for a 5.5 percent year-on-year gain. Economists polled by Reuters had expected a 0.2 percent monthly rise.

Without the volatile construction and energy prices, or what some economists call core producer price inflation, prices fell 0.1 percent month-on-month. Energy prices rose 0.8 percent against September and 12.4 percent year-on-year.

Producer prices are a good indication of inflationary pressures awaiting consumers, because increases in prices at factory gates are usually passed on to them.

[xchrom]

37. Merkel urges euro fiscal union to tackle debt crisis

http://www.bbc.co.uk/news/world-europe-15997784

German Chancellor Angela Merkel has said Europe is working towards setting up a "fiscal union", in a bid to resolve the eurozone's debt crisis.

She told the Bundestag that a new EU treaty was needed to set up such a union and impose budget discipline.

On Monday she is to meet French President Nicolas Sarkozy, who has also called for EU treaty changes.

EU leaders have been under pressure to do more to tackle the debt crisis, amid concern about the survival of the euro.

[xchrom]

41. Stock markets rise as Merkel calls for closer union

http://www.bbc.co.uk/news/business-15998609

European stock markets have opened higher as Europe's leaders call for closer economic integration as the way to ultimately resolve the debt crisis.

Leading indexes in France, Germany and the UK were all up between 1.5% and 2% in early trading.

In a speech to the Bundestag, German Chancellor Angela Merkel said Europe was working towards "fiscal union".

Investors are also looking forward with some optimism to key US unemployment figures due out later on Friday.

[xchrom]

44. Eurozone crisis: Merkel pledges push for fiscal union - live

http://www.guardian.co.uk/business/blog/2011/dec/02/eurozone-crisis-cameron-sarkozy-merkel

1.52pm: Some reaction to the US data. Rob Carnell at ING noted that there were strong job gains in the retail sector, which added 50,000 jobs in November. Temporary help supplied rose 22,000, although he described manufacturing jobs growth of only 2,000 as "pretty disappointing".

In contrast to the slightly soft headline figure, the unemployment rate fell far more than expected, dropping 0.4pp to 8.6%. This fall resulted from a combination of a decent 278K gain in employment according to the household employment survey, and also a fall in the civilian participation rate of 315K. The U6 broad unemployment rate fell even more from 16.2% to 15.6%.

These household survey figures have been running consistently stronger than the payrolls numbers, and suggest that there may be even more substantial upward revisions to payrolls in the New Year when annual benchmark revisions are made.

But despite the strength of the household figures, the wages numbers were weak. Hourly earnings fell 0.1%mom, taking the YoY rate down 0.1pp to 1.8%. And average weekly earnings also fell 0.1% on the month.

Moreover, the average and median duration of unemployment rose again, suggesting that structural unemployment remains a problem.

[xchrom]

46. Unions lose CPI pensions battle in high court

http://www.guardian.co.uk/money/2011/dec/02/unions-lose-cpi-pensions-battle

Unions have lost their high court challenge to changes in the way annual public sector pension increases are calculated, resulting in smaller pensions for millions of public sector workers.

Unions representing public sector staff took their case to the high court to challenge the government's decision to change the way their pensions are uprated from the RPI index to CPI, a decision announced by George Osborne in his June 2010 emergency budget which came into effect in April.

CPI has risen by a smaller amount over the past two years than RPI, and doesn't contain certain costs included in the latter, such as council tax, mortgage interest, house depreciation, TV and road fund licences.

The government's move prompted legal action from groups including Unison, Unite, the Fire Brigades Union, teachers' union NASUWT, the National Union of Teachers, the National Association of Retired Police Officers and the Civil Service Pensioners' Alliance.

[xchrom]

50. Croatia Dreaming of no-strings membership

http://www.presseurop.eu/en/content/article/1238841-dreaming-no-strings-membership

Croatia is not Greece or Spain. Prime Minister, Mrs Jadranka Kosor, is neither George Papandrou or José Luis Rodríguez Zapatero. The leader of the social-democrat opposition, Zoran Milanovic, is certainly not Lucas Papademos, Mario Monti or Mariano Rajoy.

The debt, unemployment, recession and endless political scandals that have rocked Croatia, a modest Mediterranean country on the edge of Cental Europe, which is now knocking on Europe’s door, clearly have no influence on the fate of the euro. Even Der Spiegel, which is renowned for its critical positions, is convinced that Croatia still deserves its ticket to Europe, which has not been obtained without effort.

The economic situation in Croatia is getting worse, but, Europe and Washington, faced with much more serious problems, are not unduly bothered that Croatia’s public debt is very close to the limit authorised by the criteria for euro convergence (it has already reached 57% of GDP). Nor that unemployment continues to rise, even at the height of the tourist season, and that Croatia has not reported any sign of economic recovery. And finally, that its sovereign bonds, which are already offering yields of close to 7%, will be severely tested for the first time on 15 March.


Not yet on the brink of bankruptcy


Croatia is close to (if it has not exceeded them already) the indicators that prompted the European crisis, even if it has less debt than Greece, fewer jobless than Spain where unemployment is setting new records, and lower rates of interest on its sovereign bonds than Italy. In fact, Croatia has less debt than most Eurozone countries, but growth has ground to a halt, reforms along with investment in new technologies have been frozen, and investors have turned their backs.




***:eyes:

[xchrom]

52. How business is preparing for Eurogeddon

http://www.presseurop.eu/en/content/news-brief/1237681-how-business-preparing-eurogeddon

Eurozone leaders may insist that a euro break-up is “never going to happen” but “some banks are no longer so sure”, points out the New York Times.

Banks including Merrill Lynch, Barclays Capital and Nomura issued a cascade of reports examining the likelihood of a breakup of the euro zone. “The euro zone financial crisis has entered a far more dangerous phase,” analysts at Nomura wrote on Friday. Unless the European Central Bank steps in to help where politicians have failed, “a euro breakup now appears probable rather than possible,” the bank said.

The New York daily of report expresses surprise that “banks in big euro zone countries that have only recently been infected by the crisis do not seem to be nearly as flustered.”

"While in the United States there is clearly a view that Europe can break up, here, we believe Europe must remain as it is,” said one French banker, summing up the thinking at French banks. “So no one is saying, ‘We need a fallback.’”

The Financial Times has followed up on this story with a report that international companies are preparing contingency plans.

Car manufacturers, energy groups, consumer goods firms and other multinationals are taking care to minimise risks by placing cash reserves in safe investments and controlling non-essential expenditure. Siemens, the engineering group, has even established its own bank in order to deposit funds with the European Central Bank.

[xchrom]

26. asia: Nikkei logs biggest weekly gain in 2 yrs but mood far from upbeat

http://uk.reuters.com/article/2011/12/02/markets-japan-stocks-idUKL4E7N20TI20111202

TOKYO, Dec 2 (Reuters) - The Nikkei average extended
gains to log its biggest weekly advance in two years on Friday,
though the mood was far from upbeat given uncertainty over
whether Europe will next week manage to cobble together steps to
counter the debt crisis there.

After rallying on a move by the world's central banks to
ease funding strains among banks, the Nikkei now faces major
resistance, including from its 75-day moving average, a
sustainable break of which is seen as depending on Europe.

"If European leaders can agree on a more active role for the
European Central Bank and possibly aid from the IMF, that would
be positive. But that looks difficult, so there's risk that we
are in for a major disappointment next week," said Norihiro
Fujito, senior strategist at Mitsubishi UFJ Morgan Stanley
Securities.

The benchmark Nikkei added 0.5 percent to 8,643.75,
for a weekly gain of 5.9 percent, its biggest since the first
week of December 2009. In one positive technical sign, the
Nikkei stayed comfortably above its 25-day moving average, at
8,573.

[xchrom]

45. China's Ordos property bust offers warning sign

http://www.guardian.co.uk/business/feedarticle/9976132

ORDOS, China, Dec 2 (Reuters) - The monumental, neo-Mongolian sculptures, empty plazas and hulking concrete shells of buildings in Ordos district, deep in the steppes of Inner Mongolia, are a potent symbol of how China's property boom can turn to bust.
Off the back of a thriving coal industry, the local government has been building a new city for one million people called Kangbashi. It sits virtually empty and property prices are falling.
Even in the old city of Dongsheng where people live and work, some 45 minutes drive away, a wave of investment has backfired. Cranes sit idle over unfinished skyscrapers and migrant workers are fleeing.
The swing in fortune -- residents and property agents say prices have dropped by up to a third -- is a severe example of what is happening in cities across China, including Shanghai and Beijing.

[xchrom]

61. Minister: China wants to invest in US roads, rails

http://hosted.ap.org/dynamic/stories/A/AS_CHINA_US_INVESTMENT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-12-02-08-47-42

BEIJING (AP) -- China wants to convert some of its mountain of U.S. government debt into investment in renovating American roads and subways, the commerce minister said Friday.

Speaking to a business group, Chen Deming said China wants closer cooperation with the United States in infrastructure, clean energy and technology.

Such investments would tie China more closely to Western economies and might help defuse fears Beijing will use its $3.2 trillion in foreign reserves - some $1.15 trillion of that in Treasury and other U.S. government debt - as a political weapon.

"We hope to achieve cooperation in the area of infrastructure," Chen told members of the American Chamber of Commerce in China.

[xchrom]

30. PRECIOUS-Gold up, EU plan to fight debt crisis expected

http://uk.reuters.com/article/2011/12/02/markets-precious-idUKL5E7N21U220111202

LONDON, Dec 2 (Reuters) - Spot gold edged up on Friday as investors sought to hedge against inflation on the view that the European Central Bank will be forced sooner or later to boost liquidity on a massive scale in a bid to alleviate Europe's debt crisis.

Gains were limited, however, ahead of a key U.S. employment report later today.

There was widespread investor expectation that a European summit next week could finally yield a concrete solution to the euro zone debt crisis, with Germany and France working hard to reach a compromise deal.

The new head of the ECB said on Thursday he stood ready to act more aggressively to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone.

[xchrom]

32. south asia: Pranab Mukherjee: India retail reform 'must for growth

http://www.bbc.co.uk/news/world-asia-india-15997391

Indian Finance Minister Pranab Mukherjee has said that allowing foreign investment in the retail sector is a "must for growth" and will help farmers and consumers.

He said opponents of the move to allow global chains to open stores were guilty of "narrow politics".

The government has faced angry opposition in parliament and a strike by many smaller traders on Thursday.

Parliament was adjourned early for the ninth day in a row on Friday.



***:eyes:

[xchrom]

65. 'Big-box' protests test India's FDI strategy

http://www.atimes.com/atimes/South_Asia/ML03Df01.html

The furious domestic reaction in India, including nationwide protests, to the government's decision to allow foreign big-box retailers such as Walmart to enter the local market shed new light on how far India still has to go in opening up to foreign direct investment (FDI).

On Thursday, small neighborhood kinara shops closed their doors in an act of solidarity and protest over the government's plans. Many outside the country are perplexed over what to make of the loud resistance to what they assumed would be a reasonably easy domestic reform for the Indian government to enact.

For US-India economic ties, the last two weeks have been some of the most interesting in several years. The Indian cabinet voted


last Thursday to allow 100% FDI into what are called "single-retail brand" operations, which are cash-and-carry stores that, according to the Wall Street Journal can "only sell to other retailers and businesses", and 51% FDI into what the government calls "multi-retail brand" stores.

The Indian retail market, currently estimated to be worth $295 billion, is a highly fragmented opportunity that offers much of the same allure to big-box retailers as does China's since both countries appear to be developing increasingly vibrant middle classes.

[Hotler]

71. If our jobs are good enough for you....

so are our Wal-Marts.

[xchrom]

74. that is some good Snark

:toast:

[Hotler]

77. HOTLER! Play nice. eom.

[Demeter]

33. Are Remotely-Processed Mortgage Assignments Another Smoking Gun?

http://www.nakedcapitalism.com/2011/11/michael-olenick-are-remotely-processed-mortgage-assignments-another-smoking-gun.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Assignments of mortgages are the legal instruments that transfers ownership of a mortgage from one party to another. In a securitized mortgage, a trust holds thousands of mortgages on behalf of investors. The investors in the various bonds that get cash flows from a single trust expect the trust to be in a position to take advantage of the rights conferred by the mortgages when certain events occur, usually payoff or default...I used my crowd-sourced online software, www.findthefraud.com, to help categorize 2,500 assignments in Palm Beach County, FL, which were recorded in late 2008 and early 2009. Palm Beach County, like any Florida county, is a high foreclosure state and, thanks to strong public records laws in Florida, serves as a good bellwether about bank business practices both in Florida and around the country....Common sense would say that an assignment should be executed either by a lawyer for the trustee for the trust, or an agent of the trust, which in this case would be a servicer or a lawyer working for the servicer. Lawyers should be geographically close to the foreclosed property, because they will need to eventually appear in court. Bankers should be close to major banking operations, since they almost always sign as senior officials: Vice President is the most typical title. We know from the robo-signing scandal that the signers don’t read what they’re signing, but it is also apparent that they’re scattered almost randomly around the country. In my 2,500 sample size I studied the county of notarization, which indicates where the primary signers are since the notary attests the documents were signed in front of him or her. This batch of assignments were signed in 35 different states, and 101 different counties. So much for consistency.

The most common county is San Bernardino, CA, which filed 746 mortgage assignments, 29.8% of the total. California overall notarized 815 Florida assignments, 32.6% of the total. Florida, which you’d expect, came next with 610 assignments, or 24.4% of the total, followed by Minnesota (9.3%), Texas (7.3%), Ohio (4.8%), Georgia (4.5%), Louisiana (2.8%), and Nebraska (2.6%). All other states had less than 2%...It isn’t clear why San Bernardino, a large portion which consists of the Mojave desert, signed off on almost one in three assignments for Palm Beach County, FL, a tropical oasis on the other side of the country. The overwhelming majority of these assignments involved HSBC or US Bank. Virtually every assignment from San Bernardino had the notarization page entirely separate from the actual assignment, despite more than adequate space for the notarization on the first page, the practice virtually everywhere else. The notary is signing, under penalty of perjury, that the document was signed in front of them and that everything on it is kosher. If I didn’t know better — and, actually, I don’t — it almost looks like the notarization pages and the assignments were being prepared separately then put together after the fact.

MUCH MORE FUNNY BUSINESS PRACTICE AT LINK

I don’t know if these assignments are illegal, or even if they’re unethical, but stealthily moving vast amounts of property for far away communities seems strange: an eye popping amount of mortgages changed hands with these assignments. Robosigning is not a victimless crime. The reason we have careful, document-intensive processes for handling real property is that it is the foundation of a nation’s wealth. A home is most families’ biggest asset. The practice of having independent parties verify the validity of signatures dates back to the 1677 Statute of Frauds. It was implemented because the lax evidentiary standards of the early 1600s allowed rich people to hire experts who would swear falsely in court about the ownership of property. The result was court-sanctioned theft and rising disorder. There are plenty of legal, ethical, economic, and financial problems with document abuses and fraud. But more than any single problem, robos rob trust. Banks are using faceless robos in rural California, Louisiana, and Nebraska to rob the people of Palm Beach County of the protection of the law and in many cases, their homes. This irrevocably destroys trust, not only with the banks that employ the robos but with everybody else too. Since banks are realistically a commodity but-for trust, you’d think that banks, especially brand-aware consumer banks, would have moved long ago to stem these practices...

[Demeter]

57. Inside the Coakley Foreclosure Fraud Lawsuit

http://news.firedoglake.com/2011/12/01/inside-the-coakley-foreclosure-fraud-lawsuit/

So we now have the complaint in Massachusetts Attorney General Martha Coakley’s lawsuit against five big banks for foreclosure fraud, the first lawsuit to directly target banks for robo-signing (Catherine Cortez Masto in Nevada went after some low-level employees of document processing company LPS, but hasn’t worked her way up to the banks yet).

Simply put, Coakley seeks penalties for “unfair and deceptive practices” in violation of state consumer protection laws, in particular the Massachusetts Consumer Protection Act. The top list of complaints tells the story:

1. Engaging in unfair and deceptive foreclosure practices by conducting foreclosures when the defendants lacked the right to do so and misrepresenting to homeowners their roles as mortgagees or as the holders of the mortgages;

2. Engaging in false documentation practices to facilitate their foreclosure practices;

3. Deceiving homeowners in the course of servicing mortgage loans by misrepresenting to borrowers regarding its loan modification programs, acting deceptively in implementing loan modifications and deceiving borrowers regarding foreclosure proceedings; and

4. Failing to comply with Massachusetts’ registration statute.

That’s a pretty clear rendering of what went on. Notice that she tags robo-signing and document fraud (in #2) as a facilitator for the main crime, which is to foreclose on borrowers without the legal standing to do so. To prove this, Coakley cites the Ibanez decision, and the upholding of it recently in Belivacqua, which clearly states that, under Massachusetts law, “any effort to foreclose by a party lacking jurisdiction and authority to carry out a foreclosure under the relevant statutes is void.” The layman’s term for that is “stealing homes.” Coakley is accusing banks of stealing homes. They didn’t have the proper proof of ownership to take control of the homes in a foreclosure, and they did it anyway, by forging documents and committing fraud upon state courts.

Then there’s this ancillary point about mortgage servicing abuse, kind of a separate claim against the banks but one that fits well. Because the argument here is that the servicers have lied to borrowers about loan modification programs, deceptively strung them out and then engaged in foreclosures instead of granting the modifications. We know that servicers have a financial incentive to foreclose over modifying, regardless of the extreme disincentive from the standpoint of the general economy or the investors the servicers are supposed to work for. The one fly in the ointment here is that nobody can prove ownership of the underlying loan. But this ruins the servicer’s ingenious plan to force people into foreclosure rather than modifying their loans! So that’s where the document fraud comes in...

MORE AT LINK

[Demeter]

58. Massachusetts Announces First Comprehensive Lawsuit Against Major Banks

http://www.nakedcapitalism.com/2011/12/massachusetts-announces-first-comprehensive-lawsuit-against-major-banks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The Massachusetts Attorney General has announced a major lawsuit against the biggest banks in the foreclosure game, namely Bank of America, JP Morgan, Citigroup, Wells Fargo, GMAC (now Ally) as well as MERS and its parent MERSCorp.

It seeks accountability for violations in the foreclosure process, including robosiging, initiating foreclosures when they were not entitled to do so, the use of MERS (both a violation of land records requirements and what amounts to unjust enrichment via failure to pay local recording fees) and deceptive practices in foreclosure (as in failing to offer modifications as required by law and would be good for borrowers).

In the press conference, Coakley described that there were numerous unnecessary and illegal foreclosures, and cited how not for profits had succeeded in obtaining loan mods, yet were unable to get mods processed for vastly larger number of similar borrowers.

She stressed how the banks didn’t care about the impact of their actions on borrowers and communities, and engaged in the same sort of reckless conduct as they did in predatory mortgage lending....MORE...This is an important step forward.

[Demeter]

38. DOW FUTURES UP 145

[DemReadingDU]

40. another day of gambling at the casino

:crazy:

[Demeter]

43. GM makes buy-back offer to Volt owners

The US carmaker is seeking to reassure buyers after battery packs in the extended-range electric car caught fire in three government test crashes

Read more >>
http://link.ft.com/r/2SRI11/HY3UI8/RP6QL/R31210/FKRURX/JY/t?a1=2011&a2=12&a3=2

[Demeter]

47. Nielsen report: TV ownership declines

http://activepolitic.com:82/Outside_News/11044.html

Every year, the estimated number of U.S. households owning TV sets goes up. Until now. According to Nielsen’s annual “Television Audience” report that was released this week, the number of households with a TV set will decline. The rising trend of TV ownership has been leveling off in recent years, and now the number has dropped from 115.9 million homes in 2011 to an estimated 114.7 million in 2012. As TV Barn pointed out, that’s a 1 percent decline despite the number of households rising.

TV ownership among the key adult 18-49 demo also declined, and even steeper (down 2.7 percent — a downtrend that started to a slight degree in 2010 and then accelerated this year). Plus, the percentage of homes without a TV is at the highest level since 1975 (3 percent, up from 1 percent the previous year).

Why is this happening? There’s a few factors that could be at play, including more people watching TV shows online and the distressed economy...Meanwhile the rich get richer: Homes with three or more TV sets will climb a notch to 56 percent.

UPDATE: A Nielsen rep, after seeing media stories reacting to their report and chart, emailed to clarify that TV ownership has actually declined once before: In 1992, “after Nielsen adjusted for the 1990 Census, and subsequently underwent a period of significant growth.”

[AnneD]

64. Our household has several......

but they are for DVD viewing. Gave up TV for Lent several years ago and never went back. No cable, no internet TV, no netflix. We are doing just fine thank you.

[Demeter]

73. Ditto

Don't even turn on one of them....I'm waiting to rearrange my home life. and waiting, and waiting, I'm beginning to think total unemployment is the only way I'll get anything done.

I'm so far behind in repairs to things the Kid has broken, it's not even funny.

[Demeter]

51. British banks could ask taxpayers for more cash

http://www.telegraph.co.uk/finance/financialcrisis/8929653/British-banks-could-ask-taxpayers-for-more-cash.html

Warning that the cost of borrowing is set to soar and "given the current exceptionally threatening environment", the Bank of England's Financial Policy Committee (FPC) instructed lenders to "limit distributions" – code for bonuses and dividends.

It also urged them to "give serious consideration to raising external capital in the coming months" – a move that would either require the taxpayer to inject more money into the banks or dilute the Governments' stakes, making it more difficult to recover the £66bn invested in Royal Bank of Scotland (RBS) and Lloyds Banking Group.

Coming the day after central banks across the world took desperate co-ordinated action to ensure European lenders can secure the funding needed to survive, Sir Mervyn King, the Bank's Governor, confirmed that there are "signs of a credit crunch already in the euro area".

He added: "I don't think that's begun yet, but you can see how it would come through here if funding costs were to continue to be as high as they are."

[xchrom]

54. Africa rising

http://www.economist.com/node/21541015

THE shops are stacked six feet high with goods, the streets outside are jammed with customers and salespeople are sweating profusely under the onslaught. But this is not a high street during the Christmas-shopping season in the rich world. It is the Onitsha market in southern Nigeria, every day of the year. Many call it the world’s biggest. Up to 3m people go there daily to buy rice and soap, computers and construction equipment. It is a hub for traders from the Gulf of Guinea, a region blighted by corruption, piracy, poverty and disease but also home to millions of highly motivated entrepreneurs and increasingly prosperous consumers.

Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.

The commodities boom is partly responsible. In 2000-08 around a quarter of Africa’s growth came from higher revenues from natural resources. Favourable demography is another cause. With fertility rates crashing in Asia and Latin America, half of the increase in population over the next 40 years will be in Africa. But the growth also has a lot to do with the manufacturing and service economies that African countries are beginning to develop. The big question is whether Africa can keep that up if demand for commodities drops.

Copper, gold, oil—and a pinch of salt

Optimism about Africa needs to be taken in fairly small doses, for things are still exceedingly bleak in much of the continent. Most Africans live on less than two dollars a day. Food production per person has slumped since independence in the 1960s. The average lifespan in some countries is under 50. Drought and famine persist. The climate is worsening, with deforestation and desertification still on the march.

[Demeter]

55. L.A. Mayor Puts Occupy L.A. Cost Over $1 Million; City Spent More on Michael Jackson Memorial

OF COURSE, WHAT WITH SALES TAXES AND VENDOR LICENSES, THEY MADE THAT MONEY BACK SEVERAL TIMES OVER...

http://blogs.laweekly.com/informer/2011/11/occupy_la_cost_1_million_michael_jackson.php

One of the most common criticisms of Occupy L.A. and its two-month stint at City Hall is the massive amount of city resources it's been sucking up to sustain itself.

Policing. Litigation. Cleanup. More policing. Refurbishing the pathetic remains of what used to be a lovely front lawn. L.A. Mayor Antonio Villaraigosa guessed this morning that...

... the costs could exceed $1 million.

We have our own criticisms about the Occupy operation, for sure. But why is everyone focusing on the price tag of the protest? Off the top of our heads, we can think of much sillier (and, fittingly, much more corporate) events/gifts on which city leaders have wasted taxpayer dough...

SEE LINK FOR DETAILS

[Demeter]

60. Fracking, Mortgages and Insurance

http://pubcit.typepad.com/clpblog/2011/11/fracking-mortgages-and-insurance.html

Homeowners who sign gas leases to permit hydraulic fracturing for shale gas in Maryland, New York, West Virginia, Pennsylvania and other states may be defaulting on their mortgages, risking loss of title insurance and homeowners' insurance coverage, and preventing future buyers from obtaining title insurance or mortgage loans on affected property. These are the consequences described by attorney Elizabeth Radow in an article in the New York State Bar Journal....

The story has also been covered in the New York Times stories...

Several members of Congress have asked mortgage regulators including FHA and FHFA, the overseer of Fannie Mae and Freddie Mac, to determine how many families may unwittingly have breached their mortgage terms, and presumably what can be done to balance the risks to lenders with the potentially harsh consequences for families. While homeowners may be caught in the middle, the potential dispute may bring large financial institutions and the energy industry face to face in a battle over the genuine risks of fracking, on the one hand, and the validity of somewhat obscure mortgage contract terms, on the other.

links at source

[kickysnana]

63. Parents house got its first offer in 13 months for 1/2 assessed value of 2009.

Still a lot to go to Jan closing but glimmer of hope for my brother the executor.

[AnneD]

66. I suspect that may be...

true price discovery, sad to say. We have not had a true price correction in housing and will not have any type of recovery in housing until prices come back in line and employment TRULY increases.

[Juneboarder]

68. The value dropped in half between '09 and '11?

What part of the country is the home in?? I haven't seen declines like that in the west (in that time period)...

[AnneD]

78. Much really relies on location....

Assessment go up and down. Mom's house has lost almost one half of the assessed value from it's high in 2006 when she tried to talk step dad into selling it. Had a buyer from California with an unsolicited bid come up to her while she was out planting her flowers. She lives outside of Phoenix so real estate is in the crapper, but her neighborhood is still very nice.

[kickysnana]

80. Suburb of St Paul MN

[Demeter]

75. I'd worry about the price paid to purchase, or finance, for comparison

Assessments come and go....and mean only how much property tax you are on the hook for.

[Huey P. Long]

72. Unleashing the Future: Advancing Prosperity Through Debt Forgiveness

Unleashing the Future: Advancing Prosperity Through Debt Forgiveness
12/02/2011
Submitted by Zeus Yiamouyiannis from Of Two Minds

Simply put, “productivity” is giving to the future, instead of taking from the future. Parasitism is the opposite: Borrowing from the future to fund present desires without credible connection to future healthy growth. Successful productivity requires the development of beneficial new approaches to value creation and the rigorous identification and confrontation of approaches that destroy value and that destroy the environmental, financial, social, and personal fabric of human endeavor. Debt forgiveness is initially brought into play to address the latter requirement, but cannot be viable over the long haul without affirmative new ways to create and exchange value. Given that we have the collective integrity, self-preservation instinct, human will, and the sense of necessity to confront our broken system, let’s first establish philosophical and practical corollaries to guide debt forgiveness as “giving to the future instead of taking from it”:

1) Vitality and worth of debt forgiveness decisions and policies will be assessed on the opportunities they create broadly and systemically, not simply confine themselves to individual cases.

2) Debt forgiveness will support global health and significantly exceed “sustainable,” including creating surplus productivity and opportunity for future generations and not just mitigating current practices.

3) Debt forgiveness and subsequent laws will ensure future legal lending is tied to the success (productivity) rather than failure (parasitism) of the borrower and will not simply be offloaded to the government.

4) Debt forgiveness will promote autonomy and sovereignty not dependence.

5) Debt forgiveness will develop, utilize, and support the metric of actual “use value” over arbitrary mark-to-model “thing value.”

6) Debt forgiveness will have the requirement of breaking up monopolies standing in the way of a true discovery of “use value.”

Case applications of debt forgiveness that confront parasitism and reward productivity

With the Occupy Wall Street (OWS) movement people are beginning to turn their attention toward fully engaging society’s corrupted and powerful decision-makers and creating their own productive alternatives. Changing a system demands something greater from a citizen than merely voting. It means coordinated action on behalf of the public interest.

The recent success of 650,000 people “moving their money” (4.5 billion dollars) from “too big to fail” banks to local banks and credit unions offers a template of what coordinated effective citizen resistance and proactive alternatives might involve.

How can we effectively administer debt forgiveness that breaks our habit of stealing from the future and creates surplus in health and social wellness? The following examples will briefly analyze current primary debt arenas and dynamics, propose debt forgiveness strategies to confront parasitism (along with citizen strategies to break up monopolies responsible for most of the parasitism), and suggest viable alternatives going from the smallest to largest debt arenas—personal (credit cards), family (mortgages), generational (student loans), national (deficit spending), and global (environmental damage).

--points explored--
Credit cards: The personal is economic
Mortgages: Indentured families
Student loans: Generational con games
--

Full, lengthy, detailed. essay at link-
http://www.zerohedge.com/news/guest-post-unleashing-future-advancing-prosperity-through-debt-forgiveness-part-4

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